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Equity program proposed to ensure SF permits recreational cannabis sales come Jan. 1

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San Francisco could start issuing permits to sell recreational marijuana as early as Jan. 1 if an equity program is approved before then. (Jessica Christian/S.F. Examiner)

San Francisco may begin issuing permits for recreational marijuana sales beginning Jan. 1, despite city officials previously indicating they wouldn’t be ready by then.

Supervisor Malia Cohen announced legislation Wednesday that would implement an equity program to prioritize who can obtain city permits to sell recreational cannabis when it becomes legal statewide Jan. 1 as result of last year’s voter approved Proposition 64.

The equity program is meant to help people of color, low-income residents and those who were arrested or convicted of drug offenses since 1971 — when then-President Richard Nixon declared a “war on drugs” — find employment and business opportunities in the cannabis industry.

SEE RELATED: SF’s proposed cannabis regulations make hazy when recreational sales could begin

Mayor Ed Lee introduced — with the blessing of The City’s first Office of Cannabis director Nicole Elliott — proposed regulations on Sept. 26 for recreational sales and use that said no permits for recreational use sales would be issued until an equity program was adopted.

There was no timeline given for the adoption of an equity program, and multiple city officials said it would take much longer than a few months to create. That meant San Francisco wouldn’t continue to lead in the cannabis industry as it had in the past.

But business and cannabis leaders had criticized that delay and said San Francisco shouldn’t wait.

Cohen’s proposal is intended to ensure The City wouldn’t wait and that an equity program would no longer be the impediment for issuing recreational cannabis permits.

The Board of Supervisors Rules Committee voted Wednesday to incorporate Cohen’s proposal into a broader set of recreational use regulations.

On Thursday, the board’s Land Use and Transportation Committee will hold a hearing on an additional set of recreational cannabis regulations regarding planning code amendments. Discussion is expected to include whether The City will allow existing medical cannabis dispensaries and equity applicants to begin selling recreational cannabis on Jan. 1.

Both committees intend to have a package of regulations before the full board for a vote Nov. 14.

The equity program would be implemented by Elliott and the Human Rights Commission. Applicants would need to obtain both a state license and a city permit.

Under Cohen’s proposal, equity applicants would be given a priority to obtain permits. Equity applicants are defined as those living in San Francisco for at least five years between 1971 and 2009 and in census tracts where at least 17 percent of the households had incomes at or below the federal poverty level. The period of time was chosen since the drug war was announced in 1971 and arrest data shows drug arrests remained high and disproportionately impacted black communities, in particular, through 2008.

Equity applicants would also need to meet at least two of five other criteria, such as someone who earns no more than 80 percent of The City’s area median income, someone who was arrested or convicted in California between 1971-2009 for a crime relating to cannabis or a nonviolent crime, and “since 1995, experienced housing insecurity in San Francisco, as evidenced by eviction, foreclosure or revocation of housing subsidy.”

An October report by the Center on Juvenile and Criminal Justice, a nonprofit that advocates for criminal justice reform, examined drug arrest rates and identified the disparities.

“San Francisco’s explosion in drug felony arrests of African Americans during the 1995-2009 period did not occur elsewhere in the state,” the report said. “From 2.6 times the state average in the early 1990s, San Francisco’s African American drug felony arrest rate abruptly rose to 5.1 times higher by the late 1990s and 7.6 times higher by 2009.”

The equity program also would consider a priority equity incubators, where the applicant isn’t an equity applicant but agrees to run their business adhering to several key conditions.

Those conditions include that at least 50 percent of all business work hours are performed by local residents and create a “community investment plan” for businesses and residents within 500 feet.

Equity incubators would also need to either mentor equity applicants or provide an equity operator with rent-free commercial space or at least 800 square feet in which to operate.

The legislation also prioritizes who should receive the permits, beginning with equity applicants followed by existing marijuana dispensary applicants who were operating as part of the Compassionate Use Act of 1996 before Sept. 1, 2016 and applications from equity incubators.

The City would also establish an Office of Cannabis fund to provide money to equity applicants for business consulting, capital improvements and legal services.

The Rules Committee could amend the proposed equity program at next week’s hearing.

Editor’s note: This story has been updated with additional information.

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